Monday, May 31, 2010

Market Reaction to First Round in Colombia

Just a quick look at the market reaction to Sunday's election. There was a lot of talk about how Mockus didn't scare investors, that may be true, but there is a lot of coverage today about how happy the markets are at Santos' big first round. As Marcelo Ballve pointed out, there was some risk surrounding the "unpredictability factor", and so Santos' big win appears to have taken that out of the equation.

First, Reuters:

The peso currency and benchmark TES bonds firmed on Monday, while the country's risk rating on JPMorgan's EMBI Plus index fell 8 points to 231 points.

"Now there is much more certainty about what might happen and what lies in store for the country. As well economic matters, the teams are well regarded. That generates stability and confidence recovers," said Alexander Cardenas, director of economic research at Colombian brokerage Acciones and Valores.

And, from Bloomberg:

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell three basis points, or 0.03 percentage point, to 8.04 percent at 11:02 a.m. New York time, according to Colombia’s stock exchange. The bond’s price rose 0.207 centavo to 120.003 centavos per peso.

“The market knows Santos,” said Bertrand Delgado, a senior Latin America economist at Roubini Global Economics, a research company in New York.

So Mockus may not have been bad, but the markets have spoke, and they clearly like Sunday's results. At least for now, it appears the country does too (I know polling in Colombia is notoriously bad, but seriously, you gotta wonder about this one, right?).

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